The S&P Wants to Rally, but Headline Risk Remains
We get Tesla and Netflix earnings tonight.
Danny Riley
October 18, 2023
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Our View
Positive seasonal patterns are fighting back against the Israeli invasion of Gaza. When this happens, the market's happy face can sink fast.
Like I said yesterday, the S&P and Nasdaq hate uncertainty and that's where we are today. And you can see the way the market (and the algos) react to the midday headlines too.
I personally think this was all thought out…let Hamas attack Israel, lure the Israelis into Gaza, bring in the Hezbollah and Iran, and draw in the United States with it. This is the risk floating around in the markets right now.
Our Lean — Danny’s Trade
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MiM and Daily Recap
ES 15-min recap
The ES sold off to 4371.75 on Globex and opened Tuesday's regular session at 4369.25. After the open, the ES rallied up to 4378.00, traded down to a daily low of 4365.75 at 9:59, and then rallied 54 points up to 4423.25 at 12:31. From there, it sold off down to 4396.50 at 1:49 after this headline hit: MORE THAN 300 KILLED IN ISRAELI AIR STRIKE ON HOSPITAL IN GAZA - CIVIL DEFENSE CHIEF IN REMARKS TO AL JAZEERA TV.
After the low, the ES hung in a 4 to 6 point back-and-fill pattern from 4388.00 to 4396 from when the ES traded up to 4398.75 at 2:50, and then the ES dropped 11 points down to 4383.50 in 1 minute. After a small uptick and a higher low at the 4384.50 level, the ES rallied back above the VWAP up to 4397.25 at 3:31 and then traded back down to 4390.00 at 3:46. It traded 4392.50 as the 3:50 imbalance showed $1.1 billion to sell and then traded up to 4401.50 at 3:56 and traded 4402.25 on the 4:00 cash close. After 4:00, the ES traded up to 4403.25 and settled at 4400.00 on the 5:00 futures close, down 5 points or 0.15% on the day.
In the end, it was a wild, choppy day. In terms of the ES's overall tone, it was resilient in light of how weak the Nasdaq was. In terms of the ES's overall trade, volume was on the high side: 270k traded on Globex and 1.552 million traded on the day session for a total of 1.822 million contracts traded.
Technical Edge
NYSE Breadth: 73% Upside Volume
Nasdaq Breadth: 60% Upside Volume
Advance/Decline: 60% Advance
VIX: ~$17.75
S&P 500 — ES Futures
Guest Post
PTG / Taylor 3 Day Cycle
Author: David D Dube (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 2 (CD2): Price extended this cycle's rally fulfilling 4417 - 4422 target zone as outlined in prior DTS 10.17.23 Briefing. Prior range was 57 handles on 1.824M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Markets continue to consolidate within the five-day value zone marked by 4380 - 4415 "sandbox" edges. Three-Day Cycle Targets have been fulfilled, so we will mark today as a "wild-card" for direction, given price is trading near POC (4400) and balanced. Geo-Political turmoil is always a potential market-moving variable as "tape-bombs" can occur at any moment. As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4405, initially targets 4420 – 4425 zone.
Bear Scenario: Price sustains an offer below 4395, initially targets 4380 – 4375 zone.
PVA High Edge = 4410 PVA Low Edge = 4383 Prior POC = 4395
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 3 (CD3
Thanks for reading,
PTGDavid
Guest post
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
Economic Calendar
